SAN FRANCISCO – PG&E Corporation’s third-quarter 2013 net income after dividends on preferred stock (also called “income available for common shareholders”) reported in accordance with generally accepted accounting principles (GAAP) was $161 million, or $0.36 per share. This compares with $361 million, or $0.84 per share, for the third quarter of 2012.
GAAP results include items that management does not consider part of normal, ongoing operations (items impacting comparability), which totaled $396 million pre-tax, or $0.52 per share for the quarter. The items impacting comparability related almost entirely to natural gas matters, including costs to validate safe pipeline operating pressures and make other safety improvements, as well as legal and other costs. For the third quarter, PG&E increased its accrual for third-party liability claims by $110 million as previously disclosed, and took a pre-tax charge of $196 million for disallowed capital expenditures relating to a required update of its Pipeline Safety Enhancement Plan.
PG&E Corporation Chairman, CEO and President Tony Earley said: “While we are disappointed by the need for another charge against earnings, we are satisfied with the solid operational performance overall in executing this important plan. During the quarter, we also were pleased to have resolved nearly all remaining third-party claims related to San Bruno through settlements that treat victims and families fairly and responsibly. It is now vital to PG&E customers that state regulators resolve pending gas proceedings in a timely and balanced manner.”
The total cost to shareholders for natural gas pipeline safety-related work incurred since the San Bruno accident or committed over the next several years exceeds $2.4 billion.
Earnings from Operations
On a non-GAAP basis, excluding items that management does not consider part of normal, ongoing operations, results were $395 million, or $0.88 per share, compared to $399 million, or $0.93 per share for the third quarter of 2012.
Among the major factors contributing to this quarter-over-quarter difference, the negative impacts of a lower regulated return on equity and debt compared to last year and a higher number of shares outstanding were only partially offset by higher rate base earnings and other smaller items.
2013 Earnings Guidance
PG&E Corporation is maintaining its previously issued 2013 guidance range for non- GAAP earnings from operations of $2.55 to $2.75 per share. On a GAAP basis, the range for projected earnings has been lowered to $1.60 to $1.96 per share.
Guidance is based on various assumptions, including the level of capital expenditures, rate base and return on equity, the amount of future equity issuances, and unrecovered shareholder costs to improve the safety of the gas pipeline system. Guidance does not include potential fines beyond the $200 million already accrued. These and other assumptions are provided in an appendix to the presentation accompanying the earnings release, available on PG&E Corporation’s website at: http://www.pgecorp.com/news/press_releases/Release_Archive2013/131030press_release.shtml.
PG&E Corporation discloses historical financial results and provides guidance based on “earnings from operations” in order to provide a measure that allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items that management believes do not reflect the normal course of operations. Earnings from operations are not a substitute or alternative for consolidated income available for common shareholders presented in accordance with GAAP. See the accompanying exhibits for a reconciliation of the differences between results and guidance based on earnings from operations and results and guidance based on consolidated income available for common shareholders.